Who Builds the Economy? Democratic Presidents Do!

I don’t want to talk down the economy as George W. Bush’s team did when he was running for president in 2000. They insisted that the economy was not as strong as all the numbers indicated it was. They eroded consumer confidence, and they started the collapse of the economy we have seen under the Bush administration.

It would be hard, though, to overstate the dangers we face. Both Sens. Obama and McCain have spoken of the economy being in a crisis. With IndyMac, we have seen the second largest bank failure in U.S. history. With Lehman Brothers, we have seen by far the largest bankruptcy in our history, dwarfing the WorldCom and Enron failures of a few years ago that were the previous record holders. Bear Stearns and Merrill Lynch are no more. Fannie Mae and Freddie Mac have failed as private companies.

Who would have thought that the Fed would go into the insurance business, taking over AIG, one of the world’s largest insurers? Jefferson County, Alabama, could declare one of the largest municipal bankruptcies in history. The city of Vallejo, California, has declared bankruptcy. Hopefully the state of California will soon have a budget and avert a terrible fiscal crisis. The governor of New York has warned that they, too, are in danger of seeing their credit rating fall.

Table of GDP Growth by President

Deregulated private companies allowed greed to lead them into doom. Through foreclosures and bank failures, they are pulling down many good people with them.

We need to change our fiscal policies and reverse the Republican tendency to deregulate everything. Which party is more suited to bring about this change?

As with the jobs numbers, we can look at inflation-corrected GDP going back to 1929. We can rank the presidents by the annual rate of GDP growth during their terms. As with the jobs numbers, almost all of the Democratic presidents come out on top. Except for the post-WWII period of Harry Truman, every Democratic president has overseen greater growth in GDP than every Republican president.

Can Congress take any credit or blame for these economic differences? Unlike the presidents, the party of Congress does not correlate well with the state of the economy. The economy does better on average with a Democratic House than a Republican one, but not by as much as with a Democratic president versus a Republican. The reality is that Congress almost always passes a budget that is very similar to the one that the president proposes. If they veer off too much from the president’s proposed course, they risk a veto.

It is not even necessary to wait for a budget to be passed for a president to have an effect. Knowledge of the president’s plan will start to affect consumer confidence from the day of the election. As soon as the president comes into office, his directives to executive departments will affect the way government is run such as setting priorities for helping workers or building infrastructure. He will quickly start pushing for bills to implement his agenda, including changes to taxes, to labor relations, to national security strategy, etc. All of these affect national income and job creation.

DISCLAIMER: The opinions expressed here are those of the individual contributor(s) and do not necessarily reflect the views of the LA Progressive, its publisher, editor or any of its other contributors.

About Richard M. Mathews

Richard M. Mathews is a Regional Vice Chair of the Los Angeles County Democratic Party and President of the North Valley Democratic Club. He is a member of the Executive Board of the California Democratic Party serving on CDP’s Legislation Committee. Richard has been honored as a 2011 LACDP Democrat of the Year and a 2008 Volunteer of the Year for the Democratic Party of the San Fernando Valley. He is the Senior System Architect for Radian Memory Systems in Calabasas, CA, where he designs computer components that are proudly built in the USA.

Comments

Here is a final update to this article, now that the books are closed on Bush II.

Bush II ended with an average annual growth rate of just 1.7%/year. That places him second only to Hoover for destroying the economy.

Democratic presidents averaged 5.2%/year growth over their last 40 years in office.

Republican presidents averaged 1.4%/year growth over their last 40 years in office.

FDR saw a drop of around 1% in his first year as he started pulling us out of the Great Depression. He then came back to have awesome increases greater than 8% in the other three of his first four years and in nine of his full 12 years (so much for the claim that it was only WWII that brought back prosperity).

Obama is starting off with a similar handicap, taking office during the economic disaster left by Bush II. Obama saw a quarter percent drop in the one full quarter since he started. We’ll see what he brings us in the next 7.75 years. Based on history, it looks like happy days will be here again.

I applaud all those Republicans who have finally said to themselves …”enough is enough.” History has shown that the American economy shows more growth under a Democratic presidency then Republican. Change is upon us. As true Americans, we must pull together and make our country strong again.

Yes, Democratic Administrations are always better at creating jobs and building up the Middle Class, which is critical right now in this economic meltdown, in which the GDP (Gross Domestic Product) must rise to prevent a possible depression! Job creation is the MOST critical aspect of our economic recovery, and Barack Obama has definite, concrete plans to create those jobs for the Middle Class. John McCain plans to continue this ridiculous trickle-down Bush economic policy that has been disastrous to our economy. I sincerely hope the Americans see this clearly and vote for their future and the future of their children and grandchildren! I am convinced that Obama is our hope for a better future! Please vote for Obama!